Introduction to SAP Credit Management


S/4 HANA SAP credit management allows companies who are SAP users to implement and manage a credit-based purchasing system for their customers. Essentially, it’s a form of financial supply chain management that’s fully integrated with the largest and most comprehensive ERP software in the world.

Through the S/4 HANA SAP credit management system, companies can sell products to customers and receive payment later, on an agreed-upon deadline. Whatever industries your company operates in, the amount that customers can purchase using this system will be determined by their credit limit. In turn, their credit limit will be based on their personal credit score, a comprehensive system for scoring a person’s financial history.

Who determines credit score?

The roots of this system go all the way back to America in the ‘50s when engineer Bill Fair and mathematician Earl Isaac developed the first version of the modern credit score. After decades of development, this was eventually refined into what’s known as the FICO credit score. Analytics company FICO is widely known as one of the world’s preeminent authorities in scoring credit. And the different credit scoring systems around the world are heavily based on FICO’s initial work, but with a slew of mechanisms for localization. For instance, while FICO’s highest credit score is from 300 to 850, the Credit Bureau of Singapore’s scoring system goes from 1,000 to 2,000.

Whichever country you’re in will determine which credit scoring system to integrate with S/4 HANA SAP credit management. The main benefit of using this system is nixing the need for external accounting software and agents when you’re already using SAP. Modifications to your existing ERP system can allow you to adopt the same credit scoring system used by the aforementioned credit organizations – but exclusively for your company’s products and services. In turn, your country’s credit bureaus may purchase or somehow acquire your business information for the purposes of determining more accurate credit scores.

A unified and integrated credit management system benefits both companies and customers

Customers will be motivated to pay for their credit balances because their scores on your management system can and will reflect on their actual credit scores. As a guide to building credit by Petal Card emphasizes, paying on time is the most important thing to do for anyone that wants to raise their credit rating. In fact, payment history can determine as much as 35% of any person’s overall score. In turn, the higher a customer can keep their score, the higher their limit, and credit-based purchasing power can become. Apart from purchasing more of your products, credit scores may also determine people’s access to business loans, boutique apartments, certain jobs, and other major factors that involve credit checks.

Furthermore, as Time’s guide to the history of credit notes, well-developed credit scores allow people to move easily between lenders and enjoy smaller down payments and interest rates for most loans. This is why giving customers the option of managing their credit through your company’s management system can also establish greater customer trust. By providing both your company and your customers with better access to credit checks and organized credit segments, S/4 HANA SAP credit management software can make any credit-related transactions easier for both.

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